The effect of financial leverage on real and accrual-based earnings management

Past research has documented a substitution effect between real earnings management (RM) and accrual-based earnings management (AM), depending on relative costs. This study contributes to this research by examining whether levels of (and changes in) financial leverage have an impact on this empirically documented trade-off. We hypothesise that in the presence of high leverage, firms that engage in earnings manipulation tactics will exhibit a preference for RM due to a lower possibility—and subsequent costs—of getting caught. We show that leverage levels and increases positively and significantly affect upward RM, with no significant effect on income-increasing AM, while our findings point towards a complementarity effect between unexpected levels of RM and AM for firms with very high leverage levels and changes. This is interpreted as an indication that high leverage could attract heavy outsider scrutiny, making it necessary for firms to use both forms of earnings management in order to achieve earnings targets. Furthermore, we document that equity investors exhibit a significantly stronger penalising reaction to AM vs. RM, indicating that leverage-induced RM is not as easily detectable by market participants as debt-induced AM, despite the fact that the former could imply deviation from optimal business practices.

Effects of abscisic acid, ethylene and sugars on the mobilization of storage proteins and carbohydrates in seeds of the tropical tree Sesbania virgata (Leguminosae)

Endospermic legumes are abundant in tropical forests and their establishment is closely related to the mobilization of cell-wall storage polysaccharides. Endosperm cells also store large numbers of protein bodies that play an important role as a nitrogen reserve in this seed. In this work, a systems approach was adopted to evaluate some of the changes in carbohydrates and hormones during the development of seedlings of the rain forest tree Sesbania virgata during the period of establishment. Seeds imbibed abscisic acid (ABA), glucose and sucrose in an atmosphere of ethylene, and the effects of these compounds on the protein contents, alpha-galactosidase activity and endogenous production of ABA and ethylene by the seeds were observed. The presence of exogenous ABA retarded the degradation of storage protein in the endosperm and decreased alpha-galactosidase activity in the same tissue during galactomannan degradation, suggesting that ABA represses enzyme action. On the other hand, exogenous ethylene increased alpha-galactosidase activity in both the endosperm and testa during galactomannan degradation, suggesting an inducing effect of this hormone on the hydrolytic enzymes. Furthermore, the detection of endogenous ABA and ethylene production during the period of storage mobilization and the changes observed in the production of these endogenous hormones in the presence of glucose and sucrose, suggested a correlation between the signalling pathway of these hormones and the sugars. These findings suggest that ABA, ethylene and sugars play a role in the control of the hydrolytic enzyme activities in seeds of S. virgata, controlling the process of storage degradation. This is thought to ensure a balanced flow of the carbon and nitrogen for seedling development.

Change in Managers’ Conceptions of Human Resources in Organisations : Outcomes of an Intervention

Managers’ conceptions of the importance of human resources are essential for creating ‘attractive workplaces’. This paper examines an intervention method aimed at creating insight among managers in small and medium-sized enterprises (SMEs) concerning the potential of human resources. The intervention method is called Focus Group Attractive Work (FGAW) and was conducted at eight enterprises in Sweden. Based on the analysis, it is concluded that the intervention method seems to be thought-provoking and to facilitate changes in managers’ conceptions of the importance of human resources, albeit to different degrees. 

Sam Atmore, Associate Director of Media Resources

Sam Atmore, Associate Director of Media Resources, reading Earth by David Brin (PS3552 R4825 E27 1990) Added to gallery 11/1/2010

April 2002: Counting the Cost: Human and Financial Resources

http://digitalcommons.winthrop.edu/dacusfocus/1018/thumbnail.jpg

Sale of credit portfolio and risk : the case of financial institutions in Brazil

Este estudo analisa se as vendas de carteiras de crédito são utilizadas por instituições financeiras para gestão de risco, de acordo com Stanton(1998) e Murray(2001) ou para captação recursos, como apontado em Cebenoyan e Strahan(2001) e Dionne e Harchaoui(2003). Duas hipóteses foram testadas quanto às vendas de carteira de crédito: 1) implicam em melhor rating na carteira remanescente; ou 2) promovem alavancagem financeira - com piora na carteira remanescente -, controlando para a existência de coobrigação e para quem esses ativos foram transferidos. A amostra inclui informações trimestrais de 145 instituições financeiras do primeiro trimestre de 2001 ao segundo trimestre de 2008. Os resultados oferecem evidências empíricas de que as instituições financeiras utilizam estas vendas para melhora do rating da carteira de crédito remanescente, ou seja, elas transferem, em sua maioria, ativos de baixa qualidade, garantindo bons ratings e melhorando a liquidez. Adicionalmente, seguindo a proposta Dionne e Harchaoui(2003) - que além de testar, evidenciam que exigências regulatórias promovem alavancagem em ativos de alto risco - foi observada a relação entre o Índice de Basiléia e rating da carteira de crédito. As conclusões foram semelhantes às encontradas por Dionne e Harchaoui(2003): quanto mais adequada – maior Índice de Basiléia - uma instituição financeira for, maiores as chances de ela possuir uma carteira de crédito com qualidade ruim.

Citizens vs. banks: institutional drivers of financial market litigiousness in Brazil

This article analyzes the institutional drivers of Brazil’s alarmingly high levels of litigation between clients and financial institutions. Most of the policy oriented literature that explores that phenomenon discusses the impacts of a perceived debtor-friendly bias of Brazilian courts on generating feedback loops of litigation that further increases interest rates and creates adverse selection within the pool of potential debtors. This literature therefore addresses the way courts behave once disputes reach their doorstep; conversely, we take a step back to understand the underlying reasons for why such a large number of disputes end up in courts in the first place. We accordingly attribute endemic litigation in Brazilian financial markets to a framework of political, economic and legal institutions and circumstances, which this article aims to unbound and explain.

Essays on banking theory and history of financial arrangements

Esta tese contém dois capítulos, cada um lidando com a teoria e a história dos bancos e arranjos financeiros. No capítulo 1, busca-se extender uma economia Diamond-Dybvig com monitoramento imperfeito dos saques antecipados e realizar uma comparação do bem estar social em cada uma das alocações possíveis, como proposto em Presscott and Weinberg(2003). Esse monitoramento imperfeito é implementado a partir da comunicação indireta ( através de um meio de pagamento) entre os agentes e a máquina de depósitos e saques que é um agregado do setor produtivo e financeiro. A extensão consiste em estudar alocações onde uma fração dos agentes pode explorar o monitoramento imperfeito e fraudar a alocação contratada ao consumirem mais cedo além do limite, usando múltiplos meios de pagamento. Com a punição limitada no período de consumo tardio, essa nova alocação pode ser chamada de uma alocação separadora em contraste com as alocações agregadoras onde o agente com habilidade de fraudar é bloqueado por um meio de pagamento imune a fraude, mas custoso, ou por receber consumo futuro suficiente para tornar a fraude desinteressante. A comparação de bem estar na gama de parâmetros escolhida mostra que as alocações separadoras são ótimas para as economias com menor dotação e as agregadoras para as de nível intermediário e as ricas. O capítulo termina com um possível contexto histórico para o modelo, o qual se conecta com a narrativa histórica encontrada no capítulo 2. No capítulo 2 são exploradas as propriedade quantitativas de um sistema de previsão antecedente para crises financeiras, com as váriaveis sendo escolhidas a partir de um arcabouço de ``boom and bust'' descrito mais detalhadamente no apêndice 1. As principais variáveis são: o crescimento real nos preços de imóveis e ações, o diferencial entre os juros dos títulos governamentais de 10 anos e a taxa de 3 meses no mercado inter-bancário e o crescimento nos ativos totais do setor bancário. Essas variáveis produzem uma taxa mais elevada de sinais corretos para as crises bancárias recentes (1984-2008) do que os sistemas de indicadores antecedentes comparáveis. Levar em conta um risco de base crescente ( devido à tendência de acumulação de distorções no sistema de preços relativos em expansões anteriores) também provê informação e eleva o número de sinais corretos em países que não passaram por uma expansão creditícia e nos preços de ativos tão vigorosa.

Estimating economic interactions of financial suppliers in Thailand

This paper presents a methodology to estimate and identify different kinds of economic interaction, whenever these interactions can be established in the form of spatial dependence. First, we apply the semi-parametric approach of Chen and Conley (2001) to the estimation of reaction functions. Then, the methodology is applied to the analysis financial providers in Thailand. Based on a sample of financial institutions, we provide an economic framework to test if the actual spatial pattern is compatible with strategic competition (local interactions) or social planning (global interactions). Our estimates suggest that the provision of commercial banks and suppliers credit access is determined by spatial competition, while the Thai Bank of Agriculture and Agricultural Cooperatives is distributed as in a social planner problem.

A restatement of the welafare costs of inflation. The wast of scarce resources in the manufacturing , banking and household sectors

Lucas (2000) estimates that the US welfare costs of inflation are around 1% of GDP. This measurement is consistent with a speci…c distorting channel in terms of the Bailey triangle under the demand for monetary base schedule (outside money): the displacement of resources from the production of consumption goods to the household transaction time à la Baumol. Here, we consider also several new types of distortions in the manufacturing and banking industries. Our new evidences show that both banks and firms demand special occupational employments to avoid the inflation tax. We de…ne the concept of ”the foat labor”: The occupational employments that are aflected by the in‡ation rates. More administrative workers are hired relatively to the bluecollar workers for producing consumption goods. This new phenomenon makes the manufacturing industry more roundabout. To take into account this new stylized fact and others, we redo at same time both ”The model 5: A Banking Sector -2” formulated by Lucas (1993) and ”The Competitive Banking System” proposed by Yoshino (1993). This modelling allows us to characterize better the new types of misallocations. We …nd that the maximum value of the resources wasted by the US economy happened in the years 1980-81, after the 2nd oil shock. In these years, we estimate the excess resources that are allocated for every speci…c distorting channel: i) The US commercial banks spent additional resources of around 2% of GDP; ii) For the purpose of the firm foating time were used between 2.4% and 4.1% of GDP); and iii) For the household transaction time were allocated between 3.1% and 4.5 % of GDP. The Bailey triangle under the demand for the monetary base schedule represented around 1% of GDP, which is consistent with Lucas (2000). We estimate that the US total welfare costs of in‡ation were around 10% of GDP in terms of the consumption goods foregone. The big di¤erence between our results and Lucas (2000) are mainly due to the Harberger triangle in the market for loans (inside money) which makes part of the household transaction time, of the …rm ‡oat labor and of the distortion in the banking industry. This triangle arises due to the widening interest rates spread in the presence of a distorting inflation tax and under a fractionally reserve system. The Harberger triangle can represent 80% of the total welfare costs of inflation while the remaining percentage is split almost equally between the Bailey triangle and the resources used for the bank services. Finally, we formulate several theorems in terms of the optimal nonneutral monetary policy so as to compare with the classical monetary theory.

Tetracaine stimulates insulin secretion through the mobilization of Ca2+ from thapsigargin- and IP3-insensitive Ca2+ reservoir in pancreatic beta-cells

The effect of tetracaine on Ca-45 efflux, cytoplasmic Ca2+ concentration [Ca2+](i), and insulin secretion in isolated pancreatic islets and beta-cells was studied. In the absence of external Ca2+, tetracaine (0.1-2.0 mM) increased the Ca-45 efflux from isolated islets in a dose-dependant manner. Tetracaine did not affect the increase in Ca-45 efflux caused by 50 mM K+ or by the association of carbachol (0.2 mM) and 50 mM K+. Tetracaine permanently increased the [Ca2+](i) in isolated beta-cells in Ca2+-free medium enriched with 2.8 mM glucose and 25 mu M D-600 (methoxiverapamil). This effect was also observed in the presence of 10 mM caffeine or 1 mu M thapsigargin. In the presence of 16.7 mM glucose, tetracaine transiently increased the insulin secretion from islets perfused in the absence and presence of external Ca2+. These data indicate that tetracaine mobilises Ca2+ from a thapsigargin-insensitive store and stimulates insulin secretion in the absence of extracellular Ca2+. The increase in Ca-45 efflux caused by high concentrations of K+ and by carbachol indicates that tetracaine did not interfere with a cation or inositol triphosphate sensitive Ca2+ pool in beta-cells.

Spatial distribution of trachoma cases in the City of Bauru, State of São Paulo, Brazil, detected in 2006: defining key areas for improvement of health resources

Introduction: The objective of this study was to analyze the spatial behavior of the occurrence of trachoma cases detected in the City of Bauru, State of São Paulo, Brazil, in 2006 in order to use the information collected to set priority areas for optimization of health resources. Methods: the trachoma cases identified in 2006 were georeferenced. The data evaluated were: schools where the trachoma cases studied, data from the 2000 Census, census tract, type of housing, water supply conditions, distribution of income and levels of education of household heads. In the Google Earth® software and TerraView® were made descriptive spatial analysis and estimates of the Kernel. Each area was studied by interpolation of the density surfaces exposing events to facilitate to recognize the clusters. Results: of the 66 cases detected, only one (1.5%) was not a resident of the city's outskirts. A positive association was detected of trachoma cases and the percentage of heads of household with income below three minimum wages and schooling under eight years of education. Conclusions: The recognition of the spatial distribution of trachoma cases coincided with the areas of greatest social inequality in Bauru City. The micro-areas identified are those that should be prioritized in the rationalization of health resources. There is the possibility of using the trachoma cases detected as an indicator of performance of micro priority health programs.

Interspecific fish hybrids in Brazil: management of genetic resources for sustainable use

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

Taxonomic diversity, niche width and similarity in the use of plant resources by bees (Hymenoptera: Anthophila) in a cerrado area

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)